Coal price rises hit Drax profits

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The Independent Online

The Power station giant Drax is one of the losers in the energy crisis. The company made more from supplying electricity – but this was offset by the increased cost of buying coal to power its generators.

Yorkshire-based Drax, which runs the largest coal-fired power station in western Europe, saw profits before interest and other charges dip 28 per cent to £206m in the first six months. But it is still shelling out £50m in dividend payments to shareholders.

Drax's fuel costs rocketed from £222m to £413m as coal prices went through the roof, driven by demand from the emerging economies of India and China.

The company also had to pay more for its carbon dioxide emission allowances – in effect a pollution tax.

The price Drax's electricity fetched from customers rose 11 per cent to £53.6p per megawatt, and is why households are now braced for more swingeing increases in their power bills. Drax produces 7 per cent of the UK's electricity.

Drax expects full-year profits will be "modestly higher than £400m" compared with £506m before. Deutsche Bank said the outlook has improved and rates the shares, down 29.5p at 693.5p, a buy.